News Releases

Emissions trading bill still needs work

6 May 2008

The government’s announcement that liquid fuels are not to enter the emissions trading scheme until 2011 and that free allocation of NZU’s to trade exposed industry is not to be phased out until 2018 are a good start, but the scheme still needs work, according to the Greenhouse Policy Coalition.

The Greenhouse Policy Coalition represents many industrials across a range of sectors on climate change issues.

Executive Director of Greenhouse Policy Coalition, Catherine Beard, said even with the proposed changes, industry in New Zealand is still at risk of becoming uncompetitive against industry from countries not facing a carbon charge.

“There is still a lot of uncertainty for industry with the proposed scheme. How many firms must share in the free allocation of a limited number of NZU’s, what are the criteria for eligibility, are there enough NZU’s to keep companies viable in New Zealand or is the allocation going to be spread too thinly?”

“In addition, there is no allowance for new investment or growth, with every new tonne of carbon having to face the full international price of carbon. This will be a disincentive for investment in the newest most efficient technology and encourage old plant to be run for longer. This could be avoided by moving to a scheme where companies are measured on an intensity basis (emissions per unit of output) against an international benchmark like ‘world’s best practice’.”

“The other issue that presents a great risk to industry is the price of carbon. According to Treasury figures the price of carbon has risen by 165% over three years and it is still rising. Economic analysis indicates the New Zealand economy can’t be exposed to those sorts of prices without significant job losses and an increasingly big gap between wages here and wages in countries that take a more cautious approach to exposing their economy to carbon markets.”

Catherine Beard says the Bill should be delayed until these problems can be addressed in a coherent and measured way, which would also give New Zealand time to assess Australia’s proposed emissions trading scheme to see if the two were compatible.